Energy costs and geopolitical risks weigh on outlook
Cyprus’ economy is facing growing pressure from international developments, particularly tensions in the Strait of Hormuz, according to economic analyst Yiagkos Hadjigiannis.
Speaking on Sigma TV’s “Mesimeri kai Kati”, he warned that Cyprus remains exposed to global economic shifts, which are currently in a “delicate balance”.
He described the situation as a geopolitical and geoeconomic “tug of war”, where energy is being used as a tool of pressure, with consequences spreading across the global economy.
Rising energy costs affect multiple sectors
Hadjigiannis said the increase in oil prices is directly impacting the Cyprus economy, from fuel costs to production and transport expenses.
“Everyone is affected,” he noted, adding that higher energy prices create a chain reaction across key sectors of the economy.
He also stressed that the effects extend beyond the present, influencing investment planning and potentially delaying ongoing projects.
Tourism under pressure from uncertainty
Tourism remains a major concern for the economy in Cyprus, which he described as a “key challenge” for the country.
While cancellations have reportedly declined, new bookings are not increasing at the same pace. Uncertainty and travel advisories from key markets such as the US and the UK are acting as a deterrent.
“As long as the situation remains unclear, it is logical for a European traveller to choose another destination,” he said, calling for a stronger national communication strategy.
Housing market and cost of living concerns
The analyst also warned of further pressure on the property market, including rising construction costs and higher rents, driven by increased energy prices.
He explained that higher oil costs affect the entire production chain, further worsening housing affordability issues.
He did not rule out delays or pauses in some construction projects until conditions stabilise.
Interest rates may rise further
Hadjigiannis also referred to the possibility of an interest rate increase by the European Central Bank, with analysts expecting a potential 0.25% rise in June.
If confirmed, households with variable-rate loans would see an increase in monthly repayments, although he noted that the changes would not be significant.
Duration of crisis is key factor
He concluded that the decisive factor for the economy in Cyprus will be the duration of the crisis.
If tensions ease quickly, the impact will remain manageable. However, if the situation persists, pressure on households, businesses, and key growth sectors will intensify.
“For a few months, I don’t think there will be serious problems for the European economy. But if this continues in the coming months, it will become very difficult,” he said.
Also read: Jet fuel supply concerns flagged by EU despite no shortage risk
For more videos and updates, check out our YouTube channel
